Detroit reaches deal that would nix pension check reductions for some retirees

Detroit fire union activists protest proposed pension reductions at the start of the city's bankruptcy proceedings in July 2013. Mediators facilitating negotiations in the case announced on April 15, 2014 a settlement that would eliminate the proposed pension check reductions for some police and fire department retirees.(MLive file | Tanya Moutzalias)

DETROIT, MI -- The city has reached a deal with a portion of its retirees that would eliminate the prospect of smaller pension checks for some 6,500 people.

Some 21,000 Detroit retirees for months have feared pension cuts as the city looks to address $18 billion of debt in bankruptcy court.

But Tuesday's settlement, announced by a team of federally appointed mediators facilitating negotiations between the city and its creditors, nixes the proposed pension cut checks for members of the Retired Detroit Police and Fire Fighters Association.

The members would see a cut in annual cost of living increases, which the city had proposed to eliminate entirely, according to the announcement from the mediators, who are led by Chief U.S. District Judge Gerald Rosen.

"The mediators are privileged to have assisted the parties to find common ground in reaching a resolution that reflects not only a fair settlement for the parties, but also recognizes the years of faithful service and the important role the police and fire fighter retirees have played in serving and protecting the city over so many years," the mediators said in the statement.

The 6,500 members of the group that negotiated the deal make up about 80 percent of retired police and firefighters, according to the statement.

Non-uniformed retirees, whose pension fund, according to Orr, is in significantly worse shape than that of police and firefighters, still face deeper cuts to their monthly checks, currently proposed at 26 percent.

Negotiations are ongoing, a hearing on the city's debt adjustment plan is scheduled for Thursday and retirees will begin voting on an updated version of the plan in May.

Orr hopes for confirmation of a final plan at the end of summer with an October 15 target for debt adjustment to take effect.

A message seeking more details on the settlement was left with the emergency manager's spokesman.

Update: Orr released the following statement.

"This is another significant step forward as we work towards securing Detroit’s long-term financial viability. I thank the Retired Detroit Police and Fire Fighters Association for its willingness to compromise, and I encourage all other parties to reach resolutions with the City in a timely fashion. We are securing support for the Plan of Adjustment – the time to resolve our differences is now."